Macquarie profit drops, costs to follow
(19 November 2008 – Australia) Macquarie Group has announced a net profit result of A$604 million for the half year, down 43 percent.
The half year net profit to the end of September 2008 was 19 percent below the net profit achieved for the second half of the 2008 financial year to 31 March 2008.
The results was 43 percent below the A$1.06 billion profit from the previous corresponding first half period when markets were very strong.
The profit, however, was greater than analyst predictions, which sent the group’s share price soaring by as much as 27 percent.
Substantial one-off costs and write-downs which totalled A$1.14 billion had a net profit impact of A$395 million. These primarily include the Italian mortgages portfolio as well as write-downs and provisions on impairments on assets and other loans.
Group chief executive officer, Nicholas Moore said that the underlying assets owned by the funds are performing in line with expectations and generating increasing cashflow.
A drop in staff bonuses helped the group achieve profit. In fact, the A$2.4 billion in bonuses in the corresponding period last year dropped to A$1.3 billion in this half.
This resulted in the group's expenses falling 33 percent over the corresponding period, and a 48 percent fall in staffing expenses.
The bank will also exit from A$15 billion worth of embattled businesses, especially its Italian and Australian mortgage books and Hong Kong real estate assets.
Macquarie has sold A$8 billion of those so far, with another A$7 billion due to be sold in the next few months.
Mr Moore said that this will be done to free up the group’s balance sheet and will subsequently be put into business activities or, if none emerge, to repay wholesale funding.
The results was 43 percent below the A$1.06 billion profit from the previous corresponding first half period when markets were very strong.
The profit, however, was greater than analyst predictions, which sent the group’s share price soaring by as much as 27 percent.
Substantial one-off costs and write-downs which totalled A$1.14 billion had a net profit impact of A$395 million. These primarily include the Italian mortgages portfolio as well as write-downs and provisions on impairments on assets and other loans.
Group chief executive officer, Nicholas Moore said that the underlying assets owned by the funds are performing in line with expectations and generating increasing cashflow.
A drop in staff bonuses helped the group achieve profit. In fact, the A$2.4 billion in bonuses in the corresponding period last year dropped to A$1.3 billion in this half.
This resulted in the group's expenses falling 33 percent over the corresponding period, and a 48 percent fall in staffing expenses.
The bank will also exit from A$15 billion worth of embattled businesses, especially its Italian and Australian mortgage books and Hong Kong real estate assets.
Macquarie has sold A$8 billion of those so far, with another A$7 billion due to be sold in the next few months.
Mr Moore said that this will be done to free up the group’s balance sheet and will subsequently be put into business activities or, if none emerge, to repay wholesale funding.
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